Story Case

Robert Jarvis and Howard Lewis were engaged in a wholesale millinery business as "Jarvis & Co.," under which name the firm had built up a big reputation. When Lewis agreed to purchase the interest of his partner, he agreed also to give a consideration for the firm name and good will. After the contract was executed, and Jarvis had disposed of his interest, he started a new millinery concern with the name Robert Jarvis & Co., and solicited the trade of the old firm. Lewis maintained that he alone had the right to the use of the name Jarvis & Co. and brought an action to enjoin Jarvis from using the name Robert Jarvis & Co. Jarvis argued that it would be unreasonable to forbid him from using his own name. What should the Court decide?

Ruling Court Case. Williams Vs. Farrand, Volume 88 Michigan Reports, Page 473; Same Case, Volume 14 Lawyers' Reports Annotated, Page 161

W. C. Williams, A. Sheley and A. Sheley Brooks, the complainants in this action, and Jacob S. Farrand, R. T. Williams, H. S. Clark and Jacob S. Farrand, Jr., the defendants, had for many years been engaged as partners in the business of wholesale druggists under the firm name and style of Farrand, Williams & Co. In the year 1890, the complainants bought the interests of the defendants in the business, with the understanding that the former were to continue the business. At first, the agreement contained the statement that they purchased the good will; to this the defendants objected, and the statement was removed. Nothing was said in their agreement as to the use of the firm name after dissolution.

The complainants continued the same business at the same place, adopting as a firm name, "Williams, Sheley and Brooks." The defendants afterwards formed a new partnership to engage in the same business and adopted as the firm name, "Farrand, Williams & Clark." They opened up their business two or three blocks distant from the place of business of the complainants.

This bill was brought by the complainants, asking, among other things, that the defendants be enjoined from using any combination of the names Farrand and Williams as a part of the firm name of the defendants. So far as the facts showed, the defendants were doing nothing to lead the public to believe that they were the old firm; they announced themselves only as formerly members of the old firm; in all their advertising it was stated that the old firm had been dissolved and that they, as members of it, had formed this, a new partnership.

Decision

When a partnership is dissolved, any member, or number of members, whose name or names appear in the old firm name, may re-engage in the same business, and adopt as the name of the new firm, their names or any combination of their names, provided they have not agreed to the contrary. In this case, it appears that the name of the new firm is but a combination of the names of the members who compose it; they have acted in good faith as they have not agreed not to use their names in a new firm. Although some confusion has been caused, the complainants are not entitled to have them enjoined from using the firm name which they have adopted.

Accordingly, it was held that the defendants were entitled to use the name adopted under the circumstances, and that the complainants have no just cause for complaint.

Ruling Law. Story Case Answer

After a partnership has done business for a long time under a given firm name, the name becomes a valuable right which will be protected by law. Any agreement made by the members upon dissolution, as to the use of the firm name, is binding upon the parties, if supported by a valuable consideration.

Upon dissolution of the relation by mere lapse of time, one or any of the partners may continue the business in the name of the old firm, if fictitiou^ in the absence of an express agreement to the contrary, provided nothing is done to deceive people into the mistaken belief that it is a continuance of the old firm. Under these circumstances, however, neither has the right to continue the business in a firm name which contains the name of a retiring partner without the consent of such partner. A retiring partner may form a new partnership, and use his name in its firm name.

Where one partner buys the interest of his copartner or co-partners, he has the exclusive right to continue the business in a fictitious firm name of the old partnership, even though nothing be said in the agreement concerning the use of the name after dissolution. But where one partner sells out his interest in the partnership and does not contract not to use his name again as a part of the firm name, he may do so, even though it may create some confusion, provided he acts in good faith, and does not consciously attempt to mislead third persons.

It would have been unreasonable for the Court, in the Story Case, to forbid Jarvis from using his own name, had he not contracted away that name. In selling his interest in the first firm, and also the good will and firm name, he denied himself the right to use that name in another concern doing the same business, in the same field. He must use some name which will clearly distinguish his own business from the one he sold to Lewis.